French Authorities Crack Down on Financial Crimes: What You Need to Know
The French government has taken significant steps to combat financial crimes, including money laundering and terrorist financing, by implementing strict regulations on freezing assets and detecting suspicious transactions.
Freezing Assets
According to the Guide to Good Practice in Implementing Economic and Financial Sanctions, “freezing” refers to the prohibition of making available or using funds or economic resources for the benefit of persons or entities subject to a freezing measure. This can include financial instruments such as:
- Letters of credit
- Bills of lading
- Bills of sale
- Documents showing evidence of an interest in funds or financial resources
The scope of assets that can be frozen is broad, encompassing:
- Units or shares of collective investments or third-country investment funds
- Any asset that can be used to obtain funds, goods, or services (as defined by the French Directorate General of the Treasury)
Detecting and Preventing Financial Crimes
To detect and prevent these crimes, professionals must have an effective system in place for identifying clients and their beneficial owners before entering into a business relationship or executing an occasional transaction. This includes:
- Screening client databases with effect from the publication date of European regulations and/or ministerial orders imposing new freezing measures
- Automated detection systems are permitted when the size and nature of the professional’s business make real-time manual detection impractical, but such systems must not lead to automated decision-making
Professionals using manual systems must ensure that their methods are effective. Screening must be carried out in accordance with applicable personal data protection regulations.
National Register and Freeze Newsflash
The French authorities have established a national register of persons subject to an asset-freezing measure on its website, which is updated as soon as new European regulations or decrees enter into force. A subscription-based “freeze newsflash” is also available to notify professionals of updates to the register.
Compliance with UNSC Resolutions and Sanctions Committees
Regulated entities must consider freezing measures set out in UNSC resolutions and decisions of the Sanctions Committees as soon as they are published on the UNSC website, and implement appropriate due diligence measures accordingly.
Conclusion
In light of these regulations, it is essential for businesses and individuals to be aware of their obligations to prevent financial crimes and ensure compliance with French law. By understanding the requirements for freezing assets and detecting suspicious transactions, professionals can help to combat financial crimes and maintain a safe and secure financial environment.